It’s amazing, how some financial traders can look at a clear winner and worry that it will become a loser. Nvidia (NASDAQ:NVDA) stock has performed extremely well in 2023 because of the company’s dominant position as a supplier of artificial intelligence (AI) chips. Sure, the naysayers can invent reasons to worry about Nvidia, but this won’t keep the company and its shareholders out of the winner’s circle.
All year long, the short-sellers pointed to Nvidia’s valuation and complained, but they were still on the wrong side of the trade. They should learn the principle of letting your winners run before they lose more money and go broke. But remember, this principle only applies to great companies, and Nvidia fits into the category of great companies.
Fund Manager Sees More Gains Ahead for NVDA Stock
Here’s a success story to consider. Adam Gold of Deep Growth Plus has held NVDA stock since 2016. He’s sitting on huge gains with that investment. Gold has struck gold with a simple concept: “Just focus on owning the best performing companies at a larger size than any benchmark.”
Notice that this principle doesn’t obsess over trailing price-to-earnings ratios or other traditional valuation metrics. It’s fine to monitor these metrics, but they’re not the be-all and end-all of successful investing.
Looking ahead, Gold is optimistic that Nvidia will make more advances in the coming year. After all, the demand for Nvidia’s products is greater than the supply. Furthermore, Gold points out, new chip architecture is coming from Nvidia.
“We try to own these companies for many decades and let compounding magic to do its job,” Gold summarized. Gold didn’t get shaken out of NVDA stock last year when the U.S. government notified Nvidia of AI chip export restrictions.
Successful investors hold on to stocks representing market leaders and innovators. Even as the panic-sellers worry about headline risk, Nvidia will prevail and continue to offer supreme value.
Nvidia Introduces New AI Chips for China
Nvidia’s management isn’t losing sleep over U.S. export restrictions to China. Previously, they assured that “These new export controls will not have a meaningful impact in the near-term.”
Moreover, in a more recent statement, Nvidia’s management reaffirmed that there’s “high demand” for the company’s advanced AI systems.
A Barron’s report put the geopolitical concerns in context. It stated, “[O]verall demand for AI applications continues to rise, in a manner that is likely to offset the impact of a broader economic slowdown.” Hence, there’s no need to worry that tensions between the U.S. and China will have a significant negative impact on Nvidia.
Nvidia isn’t just sitting around and allowing geopolitical issues to dent the company’s bottom line. According to Reuters, Nvidia plans to release several new AI chips specifically for the Chinese market.
These new AI chips may have reduced computing power to get around the export restrictions. Yet, they’ll assuredly still be of high quality because they’re produced by Nvidia.
SemiAnalysis analyst Dylan Patel provided a positive assessment of Nvidia’s savvy strategy in developing new AI chips for China. “Nvidia is perfectly straddling the line on peak performance and performance density with these new chips to get them through the new U.S. regulations,” Patel opined.
NVDA Stock: You Can’t Argue With a Winner
Nvidia is a market leader, and is finding a smart way to deal with U.S. export controls to China. Nevertheless, some short-sellers will dig their heels in and continue to bet against Nvidia.
You don’t have to follow them into the abyss. Holding shares of highly successful companies is a time-tested strategy that passes the common-sense test. Therefore, NVDA stock gets an “A” grade and it’s not too late to consider a share position in Nvidia.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
